This article explains Mexico's measure to prohibit temporary imports of finished footwear under the IMMEX program.
Decree Promulgation and Regulatory Content
The Mexican government published a decree on August 28 amending the IMMEX (Manufacturing, Maquiladora and Export Services Program) decree in the official gazette. This amendment adds 50 items related to footwear (finished products) under HS codes 6401 to 6405 to the exception list (IMMEX decree Annex I) that cannot be temporarily imported even by companies under the IMMEX program.
The IMMEX program allows temporary imports (bonded imports) of parts, raw materials, and machinery necessary for operations, conditional on the export of products or services.
Serious Situation of Domestic Footwear Industry
Industry Contraction Reality: According to data from the National Institute of Statistics and Geography (INEGI), Mexico's domestic footwear industry has been in serious decline, with the footwear industry's average annual GDP growth rate being negative 3.1% from 2019 to 2024.
Harsh Performance in 2024: 2024 was particularly severe, with GDP declining 12.8% compared to 2023, production shrinking 12.5%, and 10,958 formal jobs lost, bringing employment in the industry to unprecedented low levels.
Import Surge and Trade Imbalance
Rapid Increase in IMMEX-based Imports: Imports of footwear (finished products) under the IMMEX program showed dramatic growth when comparing 2024 to 2023, with quantity increasing 2.6 times and value growing 60.3%. Compared to 2021 imports, quantities increased more than 24 times and value more than 12 times.
Deterioration of Export-Import Ratio: Looking at the ratio of footwear exports divided by imports, it was 6.59% in 2021 but fell to 0.88% in 2024, showing a structural shift where import volumes far exceed export volumes.
Reality of Fraudulent Use and Countermeasures
Abuse of Tax Incentives: Economy Minister Marcelo Ebrard emphasized at an August 28 press conference that "temporary imports were not supposed to enter the domestic market and didn't need to pay value-added tax (IVA) because they were for export purposes. However, many companies that imported footwear sold them in the Mexican domestic market without exporting."
Industry Petitions: It was explained that the amendment came about due to footwear industry petitions regarding these fraudulent practices. The National Footwear Industry Association (Canaical) and Guanajuato State Footwear Industry Association (CICEG) stated in their declaration that this measure represents "historic progress for domestic industry" and a firm step in protecting domestic production, employment, and legality.
The article demonstrates that measures to prevent fraudulent use of trade systems aimed at domestic industry protection were implemented as the government's proactive response to serious industrial crisis and job losses.